Monday, November 26, 2012

Warren Buffet Proposes A Minumum Tax On The Super Rich

Tax policy has taken the center stage as politicians maneuver to avoid the fiscal cliff.  One of America's wealthiest individuals has advice for the politicians.  He tells them not to worry about the mythical problem of the lost investment incentive from higher taxes on the wealthy.  Taxes were a lot higher in the past and and investors did very well.  So did the economy.  He also advocates the radical idea of a progressive tax system.  The wealthy, whose incomes have grown enormously in recent years, should pay a higher effective tax rate than ordinary Americans.  Some of them paid no income tax last year.  The wealthy use a variety of methods to avoid paying taxes.  The only way to keep the wealthy from using tax shelters to avoid taxes is to impose a minimum tax.  He is probably correct, but it is highly unlikely that politicians, in their employ, would actually invoke a simple rule that shut down the the lucrative tax avoidance scams that they use.

Even though Buffet's advice will be ignored by our politicians, his article serves an useful purpose.  The more that the public knows about these issues, the harder it will be for politicians to work exclusively for the super rich.  Its also important that this message comes from one of America's wealthiest individuals.  He puts many of them to shame, and he can't be accused of being motivated by envy.  At worse, he will be criticized as an old fashioned American who is unaware of how the new America has evolved into a plutocracy.  He is so 1950's.

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